Chip designer CSR has jumped by more than a third after agreeing to sell its mobile handsets business to Samsung for $310m in cash.

Under the terms of the deal, Samsung will also pay $34.4m to buy a 4.9% stake in CSR at 223p a share. In the market CSR has climbed 78.3p to 296.6p. CSR said it would return $285m to shareholders once the deal completes in the fourth quarter.

The move will allow CSR to focus on areas where it has better market positions, such as audio, automotive and bluetooth. Its handset business had been disadvantaged in recent years since its chips were rarely included in smartphones, now the dominant sector. CSR chief executive Joep van Beurden said:

I believe under Samsung's ownership the handset operations will be in a better position to prosper in the global handset market.

The company added that trading in the second quarter remained robust, and it expected to report second quarter revenues at the top end of the previous guidance of $245m to $265m. Analyst Alex Jarvis at Peel Hunt said:

The move is sensible given [CSR's] inability to compete long-term in this market and completes process of refocusing on platforms in non-handset markets.

But it was unfortunate timing for Citigroup to issue a sell note on CSR and cut its target price from 210p to 205p. The bank said:

In our view, CSR has the weakest fundamentals within our European semiconductor coverage, with headwinds in four end-market segments offsetting stable contributions from the retained Zoran segments (cameras and imaging) and high single digit growth in the rest of the business.